The Labor government has unveiled a bold election promise that could offer much-needed relief to university students and graduates, committing to a 20 per cent cut on all student loan debts.
According to its estimates, the proposal would result in an average reduction of $5,520 for students and graduates, starting July 2025.
Unveiling Labor’s latest commitment, Minister for Education Jason Clare described the proposal as a “game-changer” for over three million Australians.
“Last year we wiped $3 billion in student debt and this is the next step. All up, it means we are wiping close to $20 billion in student debt,” he said in a statement on Friday.
Assistant Minister for Education Anthony Chisholm added the move will help bring millions of Australians “a bit closer to paying off their student loans”.
“We said we’d create a better and fairer education system, our HECS debt relief and changes to how indexation is calculated are a major part of this plan,” he stated.
According to government calculations, those living in NSW or Victoria could see student debt reductions of more than $5,700 while the figure stands at around $5,680 in the ACT.
Students in South Australia and Western Australia could see reductions of over $5,165 and $5,124 respectively and those in Queensland could benefit from a $5,357 reduction in their HECS debt.
In Tasmania and the Northern Territory, the cuts are slightly smaller but still substantial, with each person potentially saving over $4,500.
In its announcement, Labor has also committed to raising the minimum income threshold for repayments from around $54,000 to $67,000. To spare you the math, the average person earning around $70,000 could be looking at savings of around $1,300 per year.
You might remember new laws passed by the Senate last year changed the way that HECS debt is indexed after surging inflation saw loans jump by an eye-watering 7.1 per cent.
Now, the rate has been capped to the lower of either the Consumer Price Index (CPI) or the Wage Price Index (WPI) — meaning hopefully more tame raises or even a cheeky refund for those who already paid off their debt after the June 2023 indexation spike.
Of course, not everyone was on board last year, with Opposition Leader Peter Dutton describing it as a “card trick” to win public favour, as reported by the Sydney Morning Herald.
The proposal was also slammed by Opposition frontbencher Paul Fletcher and Nationals leader David Littleproud who said it was a “profoundly unfair policy” that would cost all 27 million Australians but benefit only 3 million.
Let’s just say we wouldn’t be surprised if this continues to be hotly contested as we head closer to the election.
PS: In case you’re curious about how much you stand to benefit from a 20 per cent cut on student loans, there’s an online calculator that’ll do the quick math for you. You can check it out here.
Lead image: Rohan Thomson/Bloomberg via Getty Images
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